Spanish Cryptocurrency Disclosure Law Moves Closer

Reading Time: 2 minutes
  • Cryptocurrency holders in Spain may soon have to declare their holdings on an annual basis
  • A new law, drafted in 2018, would require holders to declare their holdings on a 720 disclosure form
  • Ukraine proposed a similar law in November 2019

Spain’s government has firmed up its plans to oblige cryptocurrency owners to disclose their holdings to the tax authority, according to spokeswoman Maria Jesus Montero. Montero added that the new regulations, which were first mooted in 2018, will form part of a wider package of legislation targeting tax fraud and will see cryptocurrency lumped in with foreign asset holdings.

Law First Drafted in 2018

Montero initially revealed the plans in October of 2018, stating at the time that “it is considered compulsory for people and companies to inform the tax agency about this operation”, in reference to the mandatory declaration of all assets to the tax authorities.

To date this has only included traditional assets, but the ‘720 disclosure’ will soon include Bitcoin and other types of cryptocurrency if the legislation is passed.

The Spanish Council of Ministers approved the draft legislation in 2018, and the last two years have been spent firming it up in preparation of making it law. The 720 disclosure form is chiefly used to keep a register of citizens’ holdings of foreign assets, to which Bitcoin will now be added.

Anyone caught holding cryptocurrency and not declaring it could be liable to pay a penalty of up to €5,000 ($5,740) for every inaccurate or false detail they report on their earnings, making it a potentially expensive omission.

Cryptocurrency Holdings to be Treated Like Foreign Assets

One of the areas that the legislation will have to address is the fact that, as it has no geographical base, Bitcoin is not technically a foreign asset. Legislators could face a legal challenge on this matter from opponents of the new bill, and it will be interesting to see how they go about fitting Bitcoin into the 720 disclosure format in a way that avoids such a legal challenge.

Ukraine imposed a similar law in late 2019, with cryptocurrency holders now required to report their holdings as well as those of their other family members in their tax returns.